Production of beer at Liverpool’s historic Cains brewery has been suspended – and the plant will be mothballed.

The famous firm has shut its loss-making supermarket own label brewing and canning operation, with the loss of 38 jobs.

And negotiations to sub-contract the brewing of Cains products to a third party brewery are now being held.

Production stopped at the plant off Parliament Street last week and will not re-start unless Cains win permission to redevelop into a £50m ‘Brewery Village’.

The plan involves restoring its original Grade II listed building to house a craft brewery, a hotel, digital studios, a delicatessen-type food hall, independent shops and a sky bar on the roof.

The sheds at the front of the site on Parliament Street would be demolished to make way for a supermarket with apartments built on top.

The plans will be submitted to Liverpool council in the summer, and if approved work could start next year.

The re-developed site would not be open for at least 18 months to two years.

A spokesman told the ECHO: “Brewing at the site has been suspended while we progress our Brewery Village scheme and we are in negotiations to sub-contract the brewing of Cains products to a third party brewery during this interim period.

“The nature of our brewery is such that its operation cannot be scaled down in a simple fashion and it would be financial madness to continue with such huge overheads for a relatively small brewing operation.”

It had planned to cease the supermarket brewing and canning business as part of the re-development, although yesterday’s announcement was much earlier than expected.

The spokesman added: “We have said all along that the brewery is at the heart of our plans for the Brewery Village scheme and this remains the case. The existing brewery will be redesigned during the anticipated redevelopment so that it is more efficient and better suited for future use.

“We are continuing to discuss matters with our advisors about how we best manage winding up the current canning and brewery side of the business. Cains is alive and kicking and we are extremely positive about our future plans, which will secure a brewing in the city for decades to come.”

The loss of 38 jobs is more than half the 56-strong workforce. that are employed at the famous brewery off Parliament Street.

Managing director Sudarghara Dusanj said: “The own label brewing and canning business for the supermarket industry has been deteriorating for some time because of competition from modern, purpose-built operations, many of them overseas. We have been working with our professional advisors in an attempt to restructure and continue this part of the business but it has not been possible.

“It is with regret, therefore, that all own label brewing and canning business for supermarkets has ceased with immediate effect. We would like to thank our staff for their dedication and hard work over the years and to wish them the very best for the future.

“Our plans to redevelop the site are progressing in a very positive manner and are unaffected by this move.”

But one worker said staff were angry at the news, adding: “There was no production at all last week so we thought something might be up.” We are feeling really annoyed to be honest.”

The £50m redevelopment plan not only involves restoring the original Grade II listed building.

Stanhope Street, which runs through the middle of the seven-acre site, but is closed to traffic, would be opened up to help create a market street type environment. Cains hopes the new “village” would become an extension of the nearby budding Baltic Triangle creative area.

The company hopes the scheme would create 800 new jobs, and will be submitting its plans to Liverpool council in the summer with a start date next year.